Homework Answers
Option A is correct.
At time Sources of Financing and Location of financing affects the cost of capital which invertly effects the risk of the firm which might exist because of restrictive capital Market reach. So,diversification helps the firm to regarding the restrictive capital market risk.
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blank 1 reinvestment / repatriation / revaluation blank 2 reinvestment / repatriation / revaluation Although the...
blank 1 reinvestment / repatriation /
revaluation
blank 2 reinvestment / repatriation / revaluation
Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. First, cash flow estimation is more complex for overseas investments. Most multinational firms set up separate subsidiaries for each foreign country in which they operate. The relevant cash flows for the parent company are the dividends and royalties paid by the subsidiaries to the parent, translated...
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The basic principles of capital budgeting are valid for both domestic and multinational capital budgeting analysis. However, it is important to recognize the unique risks that multinational firms face when they perform capital budgeting analysis in a foreign market. For instance, a U.S.-based multinational firm might conduct business in Brazil, but any profits made must be repatriated, or returned, to the parent company and converted to U.S. dollars. There are significant risks inherent in these rather simple operations. In the...
blank 1 reinvestment / repatriation /
revaluation
blank 2 reinvestment / repatriation / revaluation
Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. First, cash flow estimation is more complex for overseas investments. Most multinational firms set up separate subsidiaries for each foreign country in which they operate. The relevant cash flows for the parent company are the dividends and royalties paid by the subsidiaries to the parent, translated...
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and investors because of diminishing investment prospects and increased cost of borrowing; II. Failure to pay accounts receivable on time by customers may have a significant negative impact on the capital base of a company; III. Companies involved in cross-border trades are subject to FX risks: IV. It is essential for banks to assess the creditworthiness of customers to mitigate...
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